Nippon Life may shed utility shares

Nippon Life Insurance Co. is considering unloading part of its shareholdings in Japanese companies, worth about ¥5 trillion, over two years or so from April, sources familiar with the matter say.

The nation’s largest life insurer is seeking to curb the risk of evaluation losses from stock price fluctuations and improve its financial strength amid continuing uncertainty in the global economy, the sources said Saturday.

Nippon Life has opened talks with major power companies about managing the selloff in stages.

Utilities are still unable to pay dividends after earnings plunged following the halt of nuclear power generation caused by the Fukushima nuclear disaster in March 2011, which spurred a revival in thermal power.

Nippon Life, one of the largest institutional investors with assets totaling about ¥50 trillion, is considering trimming its shareholdings in a broad range of companies, the sources said.

In the April-September half, Nippon Life took an evaluation loss of ¥347.9 billion on its securities holdings.

The insurer also hopes to lift its solvency margin ratio — a key indicator of an insurer’s ability to pay claims to policyholders — by reducing exposure to equities because stocks are considered higher risk assets in calculating the margin ratio.

Nippon Life’s solvency margin ratio stood at 565.5 percent as of the end of September. An insurer is deemed financially healthy if it has a ratio above 200 percent, but Nippon Life’s latest ratio is the lowest of Japan’s four largest life insurers.